A Company Would Use Multiple Cost-Allocation Bases ________

question 172

Multiple Choice

A company would use multiple cost-allocation bases ________.

• A) if managers believed the benefits exceeded the additional costs of that costing system
• B) because there is more than one way to allocate overhead
• C) because this is a simpler approach than using one cost allocation base
• D) if managers believe that using multiple cost-allocation bases is the only acceptable method

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Definitions:

Net Credit Period

The amount of time allowed by a seller to the buyer to pay for the goods or services purchased on credit.

Operating Cycle

A measure of the time it takes for a business to purchase inventory, sell products, and convert sales into cash.

Invoice Date

This is the date on which an invoice is issued, marking the point when the seller officially requests payment from the buyer for goods or services provided.